The former England captain issued a statement explaining his decision, accusing the FA of making his position with the team "untenable".
The hearing into allegations that Terry used a racist slur towards the QPR defender last season follows Terry being found not guilty of a racially aggravated public order offence at Westminster Magistrates Court in July.
A guilty verdict over what is a similar offence under FA rules would have put pressure on the game's governing body to prevent Terry playing for England, having already stripped him of the England captaincy while he awaited trial.
The defender has now taken that decision out of their hands, ending his nine-year international career himself.
The 31-year-old said in a statement: "I am today announcing my retirement from international football. I would like to thank the England managers who have selected me for my 78 caps. I have had great pleasure in sharing that honour with all the players that I've played with.
"I would like to thank them, the fans and my family for their support and encouragement during my international career. Representing and captaining my country is what I dreamed of as a boy and it has been a truly great honour.
"I have always given my all and it breaks my heart to make this decision. I want to wish Roy [Hodgson] and the team every success for the future.
"I am making this statement in advance of the hearing of the FA disciplinary charge because I feel the FA, in pursuing charges against me where I have already been cleared in a court of law, have made my position with the team untenable.
"I now look forward to playing for Chelsea, and challenging for domestic and European honours, and I want to thank the fans and the club for their continuing support."
Terry made his England debut in 2003 as a substitute against Serbia and Montenegro. He was named captain in 2008 by Fabio Capello but was then stripped of the role in February 2010 following allegations over an affair with the French model Vanessa Perroncel – a former partner of his England team-mate Wayne Bridge.
He regained the captaincy in March 2011 but lost it once more in February. The decision was then taken by members of the 14-strong FA board, without consulting Capello, a decision which prompted the Italian to resign.
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